Finance minister big waiwer for farmer has caused inflation in the market. What has happened is farmer need not to pay his debt stop selling food grains. And now since he dont have to pay the intrest he is holding the commodity for better price. To other farmers it has given purchase power which has further increased inflation.
The waiver is good, but this should be done in very step wise.
TInflation many-times occur from without, like the sudden rise in oil prices which has a multiplier effect all the way down the chain - higher energy cost means higher production costs, means higher product prices. Govt too has its share f blame - it's directly responsible for the miserable state of the agriculture sector, especially with its outdated, outmoded socialist policies still prevailing. There's no way the millions of farmers can make a living from their tiny land-holdings. These folks need to move to steady, better-paying jobs in other sectors like services, manufacturing etc, and allow for consolidation of landholding to minimum 10 acres which will actually benefits of economies of scale, especially if there's come kind of producers co-op in place, not just in production, but also in marketing. The need of the hour is land, labor and agriculture reforms which will not just grow the economy, but create jobs in other sectors that will allow marginal farmers to get steady better-paying jobs.
TO A COMMON MAN THE INFLATION MEANS NOTHING. MR RAGAVAN,PLZ KEEP YOUR "THEORY"OF INFLATION WITH YOU .A COMMON MAN CRIES WHEN HE IS FINDING THE PRICES TOUCHING THE "SKY"EVEN MANY TIMES WHEN GOVT SAYS"THERE IS FALL IN INFLATION" EVEN THEN FOR A COMMON MAN "PRICES"REMAIN HEIGH.HOW THE GOVT&PEOPLE LIKE YOU MEASURE INFLATION,YOU KNOW BETTER
Because we are constantly propping up the dollar by buying up what is essentially a commodity loosing by the day, we are paying a hidden subsidy which is now undermining our own economy - try telling this to reddy !
The Government is restricting Rice exports with an aim to bring down inflation.But this is just not sufficient.It has to keep check on huge stock piles by the private traders who await an opportunity for bigger profits thereby making the condition worse.If the government manages to capture these stocks by levying huge taxes on these stocks or similar,these traders will surrender the stocks to the government at fairly reasonable rates to avoid taxes & hence the government can easily lower the rice prices & also can achieve its targets for its subsidised programmes.
"So this broader definition focuses on money supply. If there is more money supply, it causes an increase. So inflation is a cause rather than effect." please someone explain the above quote from the article.I presume inflation is more of an effect of more money supply which isthe cause.
RE:please someone explain
by arun singh on Mar 29, 2008 09:56 PM
Supply of money without corresponding increase in the supply of goods and services is inflation. So supply of excess money may be good (for example people going overseas in a large manner and sending money back home) if this excess money is matched with supply of additional goods and services. That way it will give a boost to economy.
RE:please someone explain
by Siby Kuriakose on Mar 29, 2008 08:51 PM
its quite simple...inflation is defined as the increase in the amount of money circulating..and therefore the cause of its depreciation...kapish?
RE:please someone explain
by Raghu on Mar 29, 2008 08:58 PM
We are sure to witness runaway inflation(>double digit)soon due to excess money supply as a result of sudden increase in salaries of CG employees and writing off loans to farmers to name a few. General Elections will further add fuel!
